1. Asia is moving away from the U.S. dollar, increasing local currency use. 2. ASEAN aims to boost local currencies to minimize exchange rate shocks. 3. The dollar's global reserve share declined sharply from over 70% to 57.8%. 4. De-dollarization raises risks for U.S. dollar portfolios among global investors. 5. Major Asian economies hedge against dollar risks, boosting demand for local currencies.
A declining reliance on the dollar may hurt U.S. export competitiveness, impacting S&P 500 companies reliant on global trade. Historical parallels can be drawn with the mid-1970s when the dollar's strength waned, negatively impacting equity markets.
The ongoing de-dollarization directly challenges the U.S. currency's influence, which can affect S&P 500 companies operating globally.
The current trends suggest a gradual realignment of global trade currencies, likely taking years to fully materialize. Long-term de-dollarization efforts may point to structural shifts in international finance that would affect the S&P 500 longer-term.